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IMF Cuts Its Global Growth Outlook, USD Traders Poised for Fed Minutes

By Baruch Spier
09 April 2014 17:17 GMT

Talking Points:

  • IMF cuts the global growth forecast for 2014
  • IMF forecast comes in one day ahead of Fed minutes
  • Emerging markets growth outlook cut by 0.2%

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April Forecast

January Forecast

IMF 2014 Global Growth Outlook

3.6%

3.7%

IMF 2014 US Growth Outlook

2.8%

2.8%

IMF 2014 Advanced Economies Growth Outlook

2.2%

2.2%

IMF 2014 Emerging Markets Growth Outlook

4.9%

5.1%

IMF 2014 Euro-zone Growth Outlook

1.2%

1%

IMF 2014 Japan Growth Outlook

1.4%

1.7%

The International Monetary Fund downgraded its 2014 growth outlook in an April forecast, particularly slicing its GDP expectations for Japan and cutting the emerging markets forecast amid Russia headwinds. However, the IMF did raise its growth outlook for the Euro-zone by .2 percentage points since its last January forecast.

The IMF also noted US growth as a major impulse for the global economy in the Tuesday release. The organization called for more monetary easing in the Euro-zone and said there is a 20% chance for Euro-zone deflation by year’s end.

The IMF announced its forecast just one day ahead of the release of the minutes from the March Fed meeting. Fed Chair Yellen said at the end of March that the economy will need extraordinary support for some time, but those comments contradicted her previous comments that a rate hike may come as soon as six months after a possible end to quantitative easing this fall. Therefore, US Dollar traders may look to the minutes for clarity on the Fed’s outlook on a rate hike.

Currency Analyst Christopher Vecchio said a bullish accelerant is much needed by the US Dollar right now and a hawkish Federal Reserve will do the trick.

-- Written by Baruch Spier, DailyFX Research. Feedback can be sent to bbspier@fxcm.com .

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09 April 2014 17:17 GMT